Probabilistic ambiguity, outcome ambiguity or both: Does it matter for the decision-maker?

Marielle Brunette, Stéphane Couture and Kene Boun My

Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), 2025, vol. 117, issue C

Abstract: Decisions under ambiguity are an integral part of the daily life of economic decision-makers. However, if ambiguity bears on the probability, on the outcome, or on both, making a decision then becomes non-trivial and the source of ambiguity can have a major impact on the decision. In this paper, we study how decision-makers react to these different sources of ambiguity. For that purpose, we implemented a lab experiment with 209 students. We found that decision-makers prefer risk over different sources of ambiguity. They also prefer outcome ambiguity to probabilistic ambiguity and double ambiguity. Interestingly, when ambiguity exists in both the outcome and probability, subjects prefer double ambiguity to probabilistic ambiguity.

Keywords: Risk; Ambiguity; Experiments; Decision-making (search for similar items in EconPapers)
JEL-codes: C91 D8 D9 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:soceco:v:117:y:2025:i:c:s2214804325000576

DOI: 10.1016/j.socec.2025.102390

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